MW Unitexx Ltd. (MWUNITEXX) - Auditors Report

Company auditors report

Independent Auditors

To the members

MW Unitexx Limited

Report on the Financial Statements

We have audited the attached financial statements of MW Unitexx Limited(hereinafter referred to as the Company) comprising of the Balance Sheet as at 31stMarch 2014 the Statement of Profit and Loss and the Cash Flow Statement for the year thenended along with the Significant Accounting Policies and other explanatory informationforming an integral part thereof.

Managements Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of theCompany in accordance with the Accounting Standards referred to in Section 211(3C) of theCompanies Act 1956 (hereinafter referred to as the Act) read with General Circular15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs inrespect of Section 133 of the Companies Act 2013 and in accordance with the accountingprinciples generally accepted in India. This responsibility includes the designimplementation and maintenance of internal control relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on theAuditors judgment including assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal control relevant to the Companys preparation and fairpresentation of the financial statements in order to design audit procedures that areappropriate in the circumstances but not for the purpose of expressing opinion on theeffectiveness of the Companys internal control. An audit also includes evaluatingthe appropriateness of accounting policies used and the reasonableness of the accountingestimates made by the management as well as evaluating the overall financial statementpresentation.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a reasonable basis for our audit opinion.

Basis for Qualified Opinion

As stated in the Notes No.24.II. 2 3 and 4 respectively of the financial statementsregarding;

(i) Continuation of capitalization by the Company in respect of Pre- operativeexpensesaggregating to Rs. 1732.03 Lacs in respect of Unimart Project under the headCapital Work in Progress despite lack of movement in the said Project during the year.

(ii) Non-provision against Long term Loans and Advances representing interest-freerefundable depositsto agents for more than a year amounting to Rs. 4471.05 Lacs againstwhich no performance has been received.

(iii) Provision for employee benefit in the books has been made based on Companysestimate rather than carrying out actuarial valuation of Employee benefit expenses whichis not in line with Accounting Standard 15- Employee Benefit. Impact of thesame on the provisions and loss for the year is presently unascertainable.

Accordingly (i) Pre-operative expenses under the head Capital Work in Progress havebeen overstated and loss for the year has been understated by Rs. 1732.03 Lacs (ii) LongtermLoans and Advances have been overstated and loss for the year has been understated byRs. 4471.05 Lacs.

Emphasis of Matter

We draw attention to Note No. 24 II (5) of the financial statements In respect ofDeposit given to one of the party which is shown under the head Long term loans andadvances amounting to Rs. 400 Lacs since March 2006. The said deposit is given foroccupying rent free area in the proposed newly constructed building. However the saidproject is still on hold by the developer but the management is hopeful of its performancein near future.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matters described in the Basis for QualifiedOpinion paragraph the financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

(a) In the case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2014;

(b) In the case of the Statement of Profit and Loss of the Profit / Loss of theCompany for the year ended on that date; and

(c) In the case of the Cash Flow Statement of the Cash flows of the Company for theyear ended on that date

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order 2003 as amended by theCompanies (Auditors Report) (Amendment) Order 2004 issued by the Central Governmentof India in terms of sub-section (4A) of Section 227 of the Act we enclose in theAnnexure a statement on the matters specified in paragraph 4 of the said Order to theextent applicable to the Company during the year under review.

2. Further to our comments in the Annexure referred to in 1. above as required bySection 227(3) of the Act we report as follows:

(a) We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit;

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;

(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this report are in agreement with the books of account;

(d) In our opinion the Balance Sheet the Statement of Profit and Loss and the CashFlow Statement comply with the Accounting Standardsasreferredto in sub-section (3C) ofsection 211 of the Act;

(e) On the basis of written representations received from the respective directors ason 31st March 2013 and taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2014 from being appointed as adirector in terms of clause (g) of sub-section (1) of Section 274 of the Act;

For Shyam Malpani & Associates

Chartered Accountants

Firm Registration No. 120438 W

Sd/-

Shyam Malpani

Place : Mumbai

Proprietor

Dated : 29th May 2014

Membership No. F- 34171

Annexure to the Auditors Report

(Referred to in paragraph IV.1 of our report of even date)

In terms of the information and explanations given to us and the books and recordsexamined by us and on the basis of such checks as we considered appropriate we furtherreport as under:

(i) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets. As explained to us the fixed assetswere physically verified by the management during the year and no discrepancies werenoticed upon physical verification of assets and comparison of the same with the updatedfixed assets register. During the year the Company has not disposed off substantial partof the fixed assets and the going concern status of the Company has not been affected.

(ii) The inventories have been physically verified by the management during the yearunder review at regular intervals.The frequency of physical verification in respect ofinventories in our opinion is reasonable and commensurate with the size of the Companyand nature of its operations. In our opinion the procedures of physical verification ofinventories followed by the management are reasonable and adequate and the Company hasmaintained proper records showing full particulars including quantitative details andsituation of its inventories.

(iii) During the year under review the Company has taken interest-free unsecured loanfromthreebodies corporate representing parties covered in the register maintained undersection 301 of the Act. In our opinion the other terms and conditions of the said loansare not prima facie prejudicial to the Companys interests. The maximum and closingbalance of the said loan is given as under:

Nature and number of the Parties

Maximum balance during the year ( Rs. in Lacs)

Closing balance ( Rs. in Lacs)

Body Corporate - 6

4009.37

4081.85

During the year under review Company has granted advances to a body corporaterepresenting aparty covered in the register maintained under section 301 of the Act. Inour opinion the terms and conditions of the said loans are not prima facie prejudicial tothe Companys interests. The maximum and closing balances of the said loan are givenas under:

Nature and number of the Parties

Maximum balance during the year ( Rs. in Lacs)

Closing balance ( Rs. in Lacs)

Body Corporate - 2

23.78

15.43

The above loans taken as well as granted are demand loans and hence there are nooverdue amounts involved. Also in our opinion the Company is taking reasonable steps torepay/recover the aforesaid loans.

(iv) In our opinion there are adequate internal control procedures commensurate withthe size of the Company and the nature of its business in respect of purchase ofinventory fixed assets and with regard to sale of goods and provision of services. Duringour audit we have not come across any continuing failure to correct major weakness ininternal controls prevailing in the Company.

(v) Transactions entered with the parties listed in the register maintained undersection 301 of the Act have been so entered. In our opinion the said transactionsenteredduring the year in respect of each party aggregating to Rs. 5.00 Lacs or more have beenmade at prices which are reasonable having regard to the prevailing market prices at therelevant time wherever such market prices are available.

(vi) The Company has not accepted any deposits from the public during the year withinthe purview of the directives issued by the Reserve Bank of India and the provisions ofSections 58A and 58-AA of the Actand the rules framed thereunder.

(vii) In our opinion the Company has a formal internal audit system which iscommensurate with the size of the Company and the nature of its business.

(viii) As explained to us the Central Government has prescribed during the year underreview for the maintenance of cost records under clause (d) of section (1) of section 209of the Act. However; the Company has got the same verified by a Cost Accountant asrequired.

(ix) As per the records verified by us the Company is generally regular in depositingthe undisputed statutory dues involving Provident Fund Customs Duty Value Added Tax andIncome Tax with the appropriate authorities and there was no amount remaining outstandingfor more than six months as at the Balance Sheet date. As regards Investors Education andProtection Fund Wealth Tax Excise Duty Service Tax and Cess we were explained that thesaid statutes were not applicable to the Company during the year under review.

As per the records verified by us and based on the explanations given to us there wereno disputed statutory liabilities with the Company at any time during the year underreview.

(x) The accumulated losses with the Company as at the close of the year are not morethan fifty percent of its net worth as at the Balance Sheet date. The Company has notincurred cash losses in its current as well as immediately preceding previous year

(xi) In our opinion and according to the information and explanations given to usthere has been default/delay in repayment of dues to a Financial Institution as wellasbanks which are as follows:

Period of Default

Amount (In Lacs)

Remark

0 - 6 Months

1000

Principal Default

0 - 6 Months

478.41

Interest Default

6 - 12 Months

1000

Principal Default

6 - 12 Months

412.15

Interest Default

(a) In respect of Financial institution the Company has defaulted in repayment ofprincipal as well as interestpayments as per table given below:

(b) In respect of bank the Company has delayed in interestpayments ranging from 8-38days amounting to Rs. 138.50 Lacs.

However the same has been regularised as at the end of the year.

(xii) As per the records verified by us the Company has not granted loans and/oradvances on the basis of security by way of pledge of shares debentures and othersecurities during the year under review.

(xiii) The provisions of any special statutes applicable to a chit fund Nidhi ormutual Benefit Companies are not applicable to the Company during the year.

(xiv) The Company has not dealt with or traded in shares securities debentures andother investments during the year under review. The Investments held by the Company are inits own name.

(xv) As per the records verified by us and based on the explanations given to us theCompany has given guarantee amounting to Rs. 500.00 Lacsfor loans taken by others frombank.

(xvi) As per the records and based on the explanations provided to us no newtermloans were raised during the year under review. (xvii) Based on the overallexamination of the Balance sheet and the funds flow we are of the opinion that no fundsraised by the Company on short term basis were utilised for long term investment.

(xviii) The Company has not made any preferential allotment of shares during the yearunder review (xix) No debentures were issued by the Company during the year under review.

(xx) The Company has not raised any money by public issue during the year under review.

(xxi) As per the records verified by us and based on the explanations given to us nofraud on or by the Company has been noticed or reported during the year that causes thefinancial statements to be materially misstated.